KUWAIT - Kuwait's LPG.

Kuwait has an installed capacity to produce over 50 MCM/day of associated gas for its complex at Shuaiba to turn over 4.6 million tons/year of LPG. This compares with less than 47 MCM/day in the high oil and gas production years of the 1970s. Kuwait also has a 1m t/y LPG plant at the Mina Al-Ahmadi oil refinery.

However, this capacity is on the basis of streams associated with 3m b/d of oil production. Kuwait's actual oil output now is limited to 2.65m b/d and current capacity does not exceed 2.7m b/d. But the oil production capacity will exceed 3m b/d by end-2007 and should reach 4-5m b/d by 2020.

The full 4.6m t/y capacity will be attained by end-2007. Kuwait will be able to expand this capacity with the use of propane and butane imported from neighbouring suppliers.

The emirate's gas plants are producing less than 3m t/y of LPG for export and local use, down from 3.5m t/y in mid-1997. The output was 3.5m t/y in 1989, the last year of normal operations before Iraq invaded Kuwait. Another 350,000-450,000 t/y are being produced by Kuwait's oil refineries.

LPG exports in 2005 will average less than 2.6m t/y, compared to 3.2m t/y in 1997, 2.8m t/y in 1995, and 2.2m t/y in 1993. LPG exports will decline further due to expansion of Kuwait's petrochemical industry (see DT of this week). LPG production is 60% propane and 40% butane.

KPC is committed to deliver up to 2.5m t/y of LPG to overseas customers under term contracts, compared to 2.4m t/y in 1997. With domestic demand on a steady rise, KPC meets the shortfall by purchasing LPG from neighbouring exporters and/or the spot market.

Most of KPC's and non-Kuwaiti LPGs are sold on CIF basis and carried by the tankers of its shipping unit KOTC.

KPC's trans-national system has market shares for oil and gas liquids expanding on both sides of Suez. External refining capacities are to reach 300,000 b/d in Europe and 400,000 b/d in Asia in the coming years.

Kuwait's natural gas reserves are associated with oil. Associated gas from the Burgan-2 field unit has the highest propane content of all Middle East gases. It has 14% propane.

Kuwait's two gas processing plants, consisting of a dedicated fractionator at Shuaiba and a unit at the Mina Al-Ahmadi oil refining centre, have had a design capacity to produce 5.6m t/y of LPG/NGL.

The fractionator at Shuaiba, not damaged by Iraq's August 1990 invasion of Kuwait and the 1991 war, has a capacity to produce 4.6m t/y of gas liquids, which break down into 45% propane and 35% butane (LPG) and 20% natural gasoline (NGL). The LPG plant at the oil refining complex of Mina Al-Ahmadi has a design capacity of over 1m t/y. Both were built in the 1970s. The Shuaiba complex came on stream in February 1979.

The LPG producing units at the Shuaiba and Mina Abdullah oil refineries also have bottling facilities for the domestic market.

The Shuaiba complex consists of three trains, designed in the 1970s for each train to receive 16 MCM/day of associated gas, and a plant for LPG bottling. It was also designed to use 40,000 b/d of gas liquids.

Because of a decline in oil production in the first half of the 1980s and a resultant shortage of gas, only one train was utilised. The second train was mothballed and the third one was kept on standby. The second train has remained mothballed. The first and third trains operate close to capacity.

The plant receives associated gas from most oilfields in Kuwait and from the fields of the Divided Zone. From the latter zone a pipeline system was built in the 1980s to feed Shuaiba and Mina Al-Ahmadi plants with 123 MCF/day of associated gas.

The LPG unit at Mina AL-Ahmadi was designed to receive associated gas mainly from the Burgan fields, particularly from Burgan-2. Burgan-2 gas, rich in ethane (a feedstock for ethylene production), has a calorific value of 1,450 BTUs per cubic foot. It is composed of: 65% methane, 20% ethane, 14% propane, 4.5% N-butane, 2% isobutane, 2.6% pentane, 1% N2, 1.5% CO2, and 0.1% H2S.

The chemical composition of gas associated with Burgan-1 field is as follows: 55% methane, 17% ethane, 10% propane, 3% N-butane, 1.2% isobutane, and 1.5% pentane. Its calorific value is 1,300 BTUs per cubic foot.

It was calculated in the 1980s that every 1m b/d of Kuwait crude oil yielded about 500 MCF of gas. To boost the gas yield further, KOC had raised the production of gas-rich Marrat sweet crude oil in 1989. New technology developed by Santa Fe was applied there, which boosted gas production and improved the treatment system.

In the past 15 years, proven gas reserves, including Kuwait's share of the Divided Zone, have been estimated at 3.11 TCM, compared to about 0.82 TCM in early 1993.

Apart from the LPG plants' requirements, associated gas is used locally for oilfield operations, power generation, water desalination, and the production of ammonia, cement, and petrochemicals. But apart from Burgan-2 and Burgan-1 gases, most of the associated gas in Kuwait is of poor quality and the ethane is not sufficient to feed a major ethylene business. This was one of the reasons behind KPC's decision in 1989 to base its $2 bn ethylene/downstream complex mostly on naphtha, LPG, and other liquids from associated gas. The complex, at Shuaiba, has been on stream since late 1997 (see DT 23).

During the first half of the 1970s, Kuwait's installed oil production capacity used to exceed 3.5m b/d. Related installations and pipelines had been built in the early 1970s to supply electric power plants based on oil and to feed the LPG/NGL plants with associated gas. About 46.8 MCM/day of associated gas supply systems were then built to feed the Shuaiba complex. A petrochemical industry, mainly to produce fertilisers, was built based on that level of gas production as well. When in the 1980s production declined, because of an oil glut, Kuwait looked for gas supplies from other sources to feed these plants and the power stations.

An agreement was reached between Kuwait and Baghdad in 1984 to purchase associated gas from southern Iraq oilfields. A pipeline, built within less than two years after that agreement, pumped the gas to Kuwait at rates ranging from 200 MCF/day to 300 MCF/d. The capacity of the pipeline by 1988 provided for 400 MCF/d in order to meet peak demand.

KPC paid Baghdad $1/m BTU for the untreated Iraqi gas at the border, compared with a border price of $1.25/m BTU paid by Dubai for untreated gas from Sharjah. Because demand for gas in Kuwait was rising rapidly and Iraq's border price was good, KPC planned to increase its purchases to 700-800 MCF/d by the mid-1990s and to raise the volume above 1 BCF/d by 2000.

Kuwaiti demand for gas was rising mainly because of the LPG sales requirements of KPC's marketing units on both sides of Suez. KPC even envisaged raising Kuwait's LPG plant capacities to about 11m t/y by 2000. KPC's petrochemical division, PIC, was also intending to expand its fertiliser plants and chemical units - all to be based on imported gas.

Negative politics in the region, however, culminated in Iraq's invasion of Kuwait in August 1990 and all those projections collapsed. The liberation of Kuwait, by a coalition of US-led forces in late Februyary 1991 and the various efforts before and after that war, are said to have cost the emirate more than $120 bn in facilities destroyed, revenues lost and overseas assets liquidated to finance its reconstruction.